What do I mean with Better Business?

This is an edited excerpt from the book Better Business Better Future, by Elisabet Lagerstedt (2022). First published on Medium.com

In my previous article, I ended with the comment that we need to start with Better Business. What do I mean with that?

To define Better Business, we first need to understand ‘business as usual’.

In 1970, economist Milton Friedman wrote a New York Times article titled The Social Responsibility of Business Is to Increase Its Profits.” In the article, Friedman argued that business leaders have no other responsibility than to increase the profits of the firm, and that anything other than a pure focus on profits is to be considered theft from shareholders, and socialism. This 50+ year-old article has been attributed to the origin of the short-sighted shareholder capitalism that we have seen far too much of during past decades and is a key characteristic of ‘business as usual’ today. Consequently, short-term value extraction over time became the norm rather than a focus on the total value that the business creates or gives back to society.

Calls for more ethical, stakeholder-oriented, sustainable and even regenerative business practices have, however, been brought forward by many, even from business leaders themselves, and from The Business Roundtable — a non-profit association whose members are chief executive officers of major US companies.

Some are now wisely suggesting that the role of business is to advance human prosperity within the boundaries set by nature. What I call Better Business will, however, not get us there. Regenerative Business will.

But what does regeneration mean? Even SustainableBrands.com is on to this nowadays, and suggests that it means: (1) “restoring, renewing and/or healing systems we all depend on, while also (2) improving the ability of said systems to restore, renew and/or heal themselves more effectively.” A carbon-capture machine can, for instance, help us restore climate stability by withdrawing carbon out of the Earth’s atmosphere. A carbon capture machine is, however, not regenerative, as it does not directly improve the Earth’s own ability to restore climate stability. Compare this with a tree. A tree accomplishes both withdrawing carbon and restoring climate stability — and is hence regenerative.

A Regenerative Business has regenerative practices, cultures and leadership and truly goes beyond what we today see as ‘business as usual’. It has already been described by frontrunners and visionaries such as Carol Sanford, Daniel Wahl, Ethan Roland, and others — that I have come to truly respect for their insightful work. As a simplified concept, Regenerative Business is also similar to Net Positive Business, as described by Forum of the Future, and Paul Polman. To help humanity thrive, a Regenerative Busienss however needs to be part of fully regenerative economy. It is simply hard to be regenerative on your own, as it demands a systems approach.

So, how might a Regenerative Business be described?

Plainly said, a Regenerative Business is a for-profit organization that return more to society, the environment and the global economy than it extracts or takes out. It is focused on all stakeholders for the good of society and our planet. It respects the rights of all other living beings; has robust circular flows; is innovative, adaptive and responsive; contributes to the health and well-being of the whole; works collaboratively across ecosystems; and balances collaboration and competition. It values all ‘rightsholders’, including natural, social and living capital, as well as financial capital. As explained by Harvard professor Greg Norris, it is inspired by nature and “boldly seeks to increase its socio-ecological handprint”. As such, it aims to restore the health of individuals and communities as well as the planet, and not only to reduce its footprint, but to give back more than it takes from both the planet and society.

Even though interest in Regenerative Business is currently on the rise, it is still in its inception. Criticism has also been put forth as this concept is now rapidly gaining popularity, and seems to be increasingly misused.

SustainableBrands.com however put together a report with a few short cases that can give you a hint of what this could mean in practice. One of the companies described is Guayakí, an organic energy beverage company founded in 1996, based in California, US, with 600 employees and a current revenue estimated at $210 million USD. Guayakí drinks are based on yerba mate, a plant known for its energizing properties (it contains caffeine) that was first cultivated and used by indigenous communities in South America. Around their beverage offering, the company has created what they call a market-driven regeneration business model. In that, they explicitly seek to regenerate life on land. They do that by sourcing from and promoting regenerative agriculture while they support, empower and partner with smallholder farmers in parts of South America. Even though Guayakí aspires to be regenerative, their sustainabilty reporting reveals that after 25 years in business, they still have a negative footprint and are not fully regenerative yet. They are however a Certified BCorp and seek to achieve net-zero by 2030, and as such, apply some of the highest standards of sustainability today.

An interesting sidenote is that Guayakí’s new CEO, Stefan Kozak, was recently recruited from a position as CEO for Red Bull North America, with earlier experience as managing director of Coca-Cola bottling operations in Brazil. On his LinkedIn profile, he describes himself as any other successful business leader would do: “20 plus years of leadership roles with proven ability to create visions, develop strategies, and build organizations and systems/processes that deliver top and bottom-line growth.” So why did he take on this position? In a press release sent out by Guayakí, Stefan Kozak said, “I am thrilled to be joining Guayakí Yerba Mate, a product I love and a company that aligns with my experience, skills and most importantly, values. Given the state of the planet and Guayakí’s longstanding commitment to sustainability and social good, I can’t imagine a better and more meaningful place to work. I look forward to building on the great work the founders and their teams have established over the past 25 years, and lead Guayakí Yerba Mate — its business, ideas, and ideals — into the future. ‘Come to Life’ is not only Guayakí’s mantra, but perfectly describes my feelings while embarking on this new journey.”

/ Regenerative Business models are open to exploration not only for startups but also for all of us who have grown up in the corporate world of business as usual /

To me, this means that Regenerative Business models are open to exploration not only for startups, but also for all of us who have grown up in the corporate world of business as usual. My own 25 plus years of business experience, however, tells me that Regenerative Business models probably feel rather unfamiliar — and far away — for most business leaders, having led their whole professional lives and careers in ‘business as usual’ and having been successful in that arena. Changing the game always feels risky, but in the long run, regenerative business models and organizations will most probably be the only way forward. Also, as the concept is now rapidly gaining popularity, it risk being watered down and loose some of its transformative powers.

Could there potentially be a first stop on the way that does not feel as radical, but that could help us accelerate this important journey — and even act as a bridge, or a stepping stone, between today and tomorrow?

There is. I simply call it ‘Better Business’.

Better Business — a stepping stone

A Better Business can in short be described as a company that has a long-term perspective and is guided and inspired by a higher purpose. As such it already differs substantially to what we have come to know as business as usual. And, it goes far beyond Corporate Social Responsibility. Yes, it’s a stretch, but it’s not out of reach.

Better Business can also be described as a conceptual stepping stone with potential to accelerate the shift towards a more thrivable future. Because learning from the frontlines — or rather, being inspired by successful examples — is a well known concept in business. Or what do you say about companies like Patagonia, Interface, Unilever, Ørsted, IKEA, and Oatly? As I will show in coming posts, these companies have over the past decade or two indeed evolved beyond the business as usual mindset that they in fact all started out with.

Better Business as a conceptual stepping stone to help accelerate the shift towards a thrivable future

Some of the distinctive characteristics of business as usual, Better Business and Regenerative Business are highlighted in the table below. As you can see, these organizations are all for-profit. Other than that, much differs, especially on the parameters of time, value creation, operation logic, choice of arena, business integration and the interpretation of corporate responsibility.

Definitions of the three concepts. Sources available in the book.

In this context, a Better Business can, as I mentioned, be described as a company that has a long-term perspective and is guided and inspired by a higher purpose. This helps the organization create, deliver and capture value to stakeholders, while minimizing ecological and social costs, engaging its business ecosystem and reducing its footprint. It could be a Certified B Corporation or a Benefit Corporation, but it does not have to be. Better Business also opens a whole new field of opportunities that are more sustainable and circular — from new value propositions to new business models and new customer segments.

Better Business hence goes far beyond the concept of Corporate Social Responsibilty, which can today be considered business as usual. Long-term, Better Business is however far from enough to build a thrivable future for humanity within the safe space of the planetary boundaries.

Even though Better Business still may sound rather far away for some, I believe that it is only a stage of development — or a bridge to what is emerging — rather than a new state or status quo. It is definitely better for people and the environment than business as usual, but it is still not fully regenerative.

/ Regenerative Business will ultimately need to evolve into the new normal /

Regenerative Business will ultimately need to evolve into the new normal in order for humanity to thrive within the natural boundaries of this planet over generations to come. We are already seeing more and more companies developing into Better Businesses, and like Patagonia and Interface some companies have already raised the bar and want to move even further.

Better Business is now bound to go mainstream as more and more companies strive to use business as a force for good. Here, there are several companies to learn from, and even ‘only’ Better Business can be considered far beyond business as usual for anyone with a more traditional business mindset and skillset. As such is can also be considered a great stepping stone to a more thrivable future for us all. Because a healthy business community completely depends on healthy societies, and a healthy biosphere. It’s all interconnected!

But how do you as a first step transform your corporate business from business as usual into Better Business? And what can you learn from those already in the frontlines of Better Business?

Those are the key questions that will be addressed in this book.

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The text above is an edited excerpt from the book Better Business Better Future by Elisabet Lagerstedt (2022). Sources to citations above are available in the book.

Please also explore the Better Business Acceleration Program™, a journey of exploration and Better Business acceleration starting with a six weeks online course based on the book. Upon completion, you can call yourself a Certified Better Business Acceleration Leader™, and are invited to an inspiring series of bi-monthly guest lectures with trailblazing leaders and companies, together with a community of likeminded leaders.

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